Footsie moves up but dealers stay downbeat

The three-day negative sequence from London's equity market was halted yesterday as a largely technical rally saw all the main FTSE indices, bar the SmallCap, move up.

Despite the general uptick, dealers were not overly enthusiastic about prospects for the summer period, which will bring increasingly lower volumes. And next week brings further disruption to market activity with the US closed on Tuesday for the Independence Day celebrations.

The good performance of the FTSE 100 yesterday owed much to strong gains in a number of specific areas, notably BP Amoco, which responded eagerly to the latest rise in crude oil prices and to the financial sectors.

The latter continued to benefit from the sector rotation effect, which saw some institutions continuing to shift out of the telecoms and high-tech sectors and into the banks and insurances which have had a hard time of it recently.

There remain general concerns in the market about the potential for emerging inflationary pressures in the US and the likelihood of instant action by the US Federal Reserve to choke off any further pressures.

Wall Street looked unsure of itself yesterday, with the Dow Jones Industrial Average slipping back over 60 points, before rallying to level. This was in spite of the Fed's decision to leave rates on hold for the time being.

Despite that news many expect the Fed to nudge rates higher later this year, possibly as early as the next FOMC meeting, scheduled for August 22nd.

The London market, meanwhile, has to face up to next week's meeting of the Bank of England's monetary policy meeting, which opens Wednesday with its decision on rates expected midday Thursday.

The consensus among economists is that the mpc will leave UK rates on hold, but there remains a lingering concern because of the recent news that the June meeting of the mpc saw the committee split six to three.

At the finish of the session the FTSE 100 index was 73.7 firmer at 6,312.7, having touched a high of 6,323.2 just before the close.

Almost as impressive was the performance of the FTSE 250, which accelerated at the close to settle a net 63.8 gain at 6,601.0.

The Techmark 100 also made a strong dash during the final min utes of the session, closing 69.57 up at 3,391.14.

The only casualty among the indices was the SmallCap, which eased 1.0 to 3,354.3.

Over the week the FTSE 100 fell 78.8 or 1.2 per cent while the SmallCap lost 25.58 or 0.8 per cent and the Techmark 100 shed 51.0 or 1.5 per cent. The FTSE 250 has outperformed, climbing 37.8 or 0.6 per cent.